Who Will Be The Next Fed Chairman?

When the Senate does come back this fall it will have something else to think about, fighting or coming together over. That would be the successor to Federal Reserve Chairman Ben Bernanke. Of course the subject of Bernanke's departure at the end of his term did not come up at a two day policy meeting of the Fed that just ended. That did not come up in a two day policy meeting of the Fed. Federal Reserve officials said the economy is expanding at a moderate pace and they gave no new signals about plans to scale back the stimulus the Fed has been providing the economy.

Still, a whole lot of other people in Washington and beyond are wondering who will take the reins. We heard earlier this week about one top candidate, Janet Yellen.

For more on the tug-of-war among Fed watchers, we turn to our own Fed watcher, David Wessel of The Wall Street Journal. Good morning.

DAVID WESSEL: Good morning.

MONTAGNE: Let's start with the basics here. Ben Bernanke's term is not up for six months.

WESSEL: That's right, but there's been an extraordinary amount of public attention, lately, on who will take his place. The president was even talking about it yesterday in these meetings he had with House and Senate Democrats. He said he's interviewed a number of candidates. He did say he's not close to making a decision, at least according to people who were there. But when one of the leading contenders - Larry Summers, the former Treasury secretary - was attacked by one of the Democrats in the House, the president defended him.

MONTAGNE: Let's talk about that. Why is Summers so controversial? Remind us, and what does the president and what does the president see in him?

WESSEL: Well, I think Larry Summers is genetically controversial.

(LAUGHTER)

WESSEL: It's his personality. He's clearly offended a lot of people, all of whom want to seem to tell the world about it right now. Some people, a number of liberal Democrats in the Senate and the House among them, are suspicious 'cause he was such a strong advocate of financial deregulation in the Clinton years. Others are peeved that a guy who got into trouble for dissing women while he was president of Harvard might edge out the first woman, Janet Yellen, to ever have a shot at the job.

But on the other hand, he has very broad experience and he's been through a couple of financial crises, both as Treasury secretary and his advisor to the president. And the president may weigh that heavily because he's seen firsthand how important a Fed chairman is, if we have another global financial or economic crisis.

MONTAGNE: Well, tell us about the differences between Larry Summers and Janet Yellen, how big are they in terms of policies that they might pursue?

WESSEL: Well, because they're rivals, people are looking about them as being different to me. But actually, in many ways, they have many of the same attitudes. They believe the government should be doing more to stimulate the economy. They'd like to see more tax cuts and more spending increases. But, of course, the Fed can't do anything about that. Neither of them sees any imminent risk of inflation. Janet Yellen has been a firm proponent of the Fed's policy of buying bonds, quantitative easing, and Larry Summers is probably a little bit more skeptical of that.

But I doubt either one of them would be in the beginning stages too much different than what Ben Bernanke is doing, which is very gradually pulling back on the stimulus the Feds offered the economy.

MONTAGNE: And does it, David, come down to the two of them at this point?

WESSEL: It looks like it. But President Obama surprised people yesterday on Capitol Hill when he mentioned a dark horse, Don Cohen, the retired vice chairman of the Fed who was a longtime aide to Alan Greenspan. Mr. Cohen is 70 years old, he's in great physical shape - he bikes, he hikes, he sails, but 70 seems a little old to me. So it does seem to be down to Janet Yellen and Larry Summers.

MONTAGNE: Well, just finally tell us how much it does matter who the Fed chairman is. It would seem to matter a lot these days.

WESSEL: I think it does. Well, we know how central the Fed is - we've seen that in the last five years. The role any one individual plays can easily be overstated, although Paul Volcker, Alan Greenspan, Ben Bernanke demonstrate how important the individual who is chairman of the Feds is. The Fed has been given a lot more regulatory oversight in the wake of the financial crisis. And Ben Bernanke set a very high standard for being a spokesman for the Fed, and being, kind of, the explainer-in-chief in the economy.

So I think it's pretty important. And it also is the person who has to get consensus among 19 policymakers at the Fed, which can be a really tricky thing. They often don't agree.

MONTAGNE: Well, we do have a couple more seconds here. So tell us how soon you think this might be a resolved - this decision.

WESSEL: The president says he's not near decision. The White House is saying sometime in the fall. The trick is to get the name out but not too soon, because the confirmation probably won't happen until January, and they don't want a candidate to hang out there forever.